1. Chapter 9: Mortgages and Notes
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2. PROMISSORY NOTE
Contract between a borrower and lender
Obligor, obligee
Principal
Acceleration clause
Signature
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3. The Mortgage Instrument
A separate agreement from the
note that provides collateral to the
lender to back up the promise
made in the note by the
borrower/mortgagor.
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4. Note and Mortgage Sequence
• Step 1 Buyer gives note to lender
and receives $$
• Step 2 Buyer pays $$ to seller
and receives deed
• Step 3 Buyer has clear title
and gives mortgage to lender
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5. COVENANTS (PROMISES)
Covenant to pay taxes
Covenant against removal
Covenant of insurance
Covenant of good repair
Covenant of preservation & maintenance
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6. MORTGAGE SATISFACTION
Partial Release
Subject to
Assumption
Novation
Estoppel
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7. First mortgage / Senior mortgage
Second mortgage / Junior mortgage
Subordination
Chattel liens
Foreclosure / Power of Sale
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Debt Priorities

8. Overview of Mortgage Foreclosure
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9. Acceleration clause
Deficiency
judgment
First mortgage
Foreclosure
Junior mortgage
Mortgage
Mortgagee
Power of sale
Promissory note
Subordination
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Key Terms